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2016 (11) TMI 121 - ALLAHABAD HIGH COURT

2016 (11) TMI 121 - ALLAHABAD HIGH COURT - TMI - Subsidy receipt - revenue or capital receipt - nature of income - Held that:- Examining the settled view of this Court in the case of CIT vs Kisan Sahkari Chini Mills Ltd. reported in (2009 (5) TMI 72 - ALLAHABAD HIGH COURT ) this Court is of the opinion that subsidy that was allowed to the assessee and was utilized by the assessee could not be in the nature of revenue but rather the subsidy receipt by the assessee was in the course of incentives .....

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of service rendered to the assessee. The Tribunal further found that AO has invoked provisions of Section 40A(2) of the Income Tax Act and has not brought any material on record to show that how the expenses claimed by the assessee were unreasonable or excessive. The Tribunal further found that it is for the businessman to decide what expenses are essential in the conduct of his business and the AO cannot enter into the shoes of a businessman and decide what expenses he should incur and what he .....

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. Modi Xerox reported in ( 2010 (2) TMI 945 - Allahabad High Court ) wherein a similar issue has been considered and the rental paid for various items by the assessee who are allowed - Decided in favour of assessee. - Inclusion of excise duty in the closing stock - Held that:- An identical question has been answered by this Court in Income Tax Appeal No.574 of 2007 (The Commissioner of Income Tax and another vs. M/s Jubilant Organosys Ltd.) [2015 (2) TMI 1192 - ALLAHABAD HIGH COURT] wherein .....

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em of accounting and the Auditors have qualified the report on this point as the liability accrued during the year the assessee claimed deduction of the balance amount of ₹ 42,28,650/- which was short provided and evidence for the same had been submitted before the AO. The only reason for not allowing the deduction was because the yearwise breakup was not given but this has not been considered necessary in view of the decision of Hon'ble Apex Court in Kedarnath Jute Manufacturing Co. (1971 .....

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sessee. - Allowability of contribution by the assessee to the molasses reserve fund - Held that:- As in the case of The Simbhaoli Sugar Mills Limited vs. The Commissioner of Income Tax, Meerut [2005 (9) TMI 590 - ALLAHABAD HIGH COURT ] wherein this Court has considered the fact that the contributions made by the assessee to the molasses reserve fund are made under the statute itself i.e. under the Molasses Control (Regulation of Fund For Erection of Storage Facilities) Order, 1976 and, there .....

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ed Counsel for the assessee. This is an appeal filed by the revenue under Section 260-A of the Income Tax Act, 1961 against an order passed by Income Tax Appellate Tribunal dated 17.03.2006. The appeal relates to the assessment year 1994-95. The substantial questions of law on which the appeal was admitted are quoted here-under:- Substantial Question of law No.1. "(1) Whether on the facts and in the circumstances of the case, the Tribunal is justified in directing the A.O. to examine the re .....

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tled view of this Court in the case of CIT vs Kisan Sahkari Chini Mills Ltd. reported in (2009) 317 ITR 322 (All.), this Court is of the opinion that subsidy that was allowed to the assessee and was utilized by the assessee could not be in the nature of revenue but rather the subsidy receipt by the assessee was in the course of incentives as per Sampat scheme. Accordingly, the subsidy receipt by the assessee was not in the course of trade and was of capital nature. The question no.1 is therefore .....

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payment of management service charges to M/s Dhampur Sugar Mills Ltd. out of the total management service charges of ₹ 24 lacs claimed by the assessee for the reason that the assessee claimed the same @ ₹ 4 lacs per month for six months whereas in the opinion of the AO the amount @ ₹ 1 lac per month was reasonable. The CIT(A) has observed that the claim of the assessee was allowable as deduction because if the assessee created such infrastructure and employed such experienced .....

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sessee were unreasonable or excessive. The Tribunal further found that it is for the businessman to decide what expenses are essential in the conduct of his business and the AO cannot enter into the shoes of a businessman and decide what expenses he should incur and what he should not incur for the purpose of business. Accordingly, the Tribunal affirmed the finding of CIT (A). The Tribunal, therefore, vacated the disallowances. This issue is also decided in favour of the assessee and against the .....

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ck transactions? (5) Whether on the facts and in the circumstances of the case, the Tribunal is justified in confirming the order of CIT (A) in deleting the disallowance of ₹ 2,51,433/- made by the assessing officer on account of disallowance of lease rental paid to various companies including Dhampur Sugar Mills Ltd. which have substantial interest in assessee's companies and there was no physical transfer of machinery?" Insofar as the questions no.4 & 5 are concerned, the Tr .....

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sessee who are allowed. Reference may be had to paragraph no.9 & 10 of the said judgement, which reads as hereunder:- "9. So far as question no. (6) is concerned, this Court has held as follows:- "We are of the considered opinion that the Tribunal was justified in allowing the assessee's claim partly towards the finance charges and partly as lease charges. We may mention here that there is no dispute that the money had not passed from the lessor/purchaser to the assessee compan .....

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facts and in the circumstances of the case, the Tribunal is justified in deleting the addition regarding inclusion of excise duty in the closing stock without appreciating the facts of the case?" Insofar as the question no.6 is concerned, the Tribunal has taken a view that the closing stock while imposing excise duty has to be excluded. An identical question has been answered by this Court in Income Tax Appeal No.574 of 2007 (The Commissioner of Income Tax and another vs. M/s Jubilant Orga .....

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ot;(7) Whether on the facts and in the circumstances of the case, the Tribunal is justified in deleting the addition of ₹ 42,28,640/- made on account of interest payable to Dhampur Sugar Mills provided in the books of account without appreciating the facts of the case?" Learned Counsel for the revenue has sought to argue that while giving the details the yearwise breakup was not given by the assessee. However, the findings recorded by the Tribunal are otherwise and it has relied on a .....

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owing the mercantile system of accounting and the Auditors have qualified the report on this point as the liability accrued during the year the assessee claimed deduction of the balance amount of ₹ 42,28,650/- which was short provided and evidence for the same had been submitted before the AO. The only reason for not allowing the deduction was because the yearwise breakup was not given but this has not been considered necessary in view of the decision of Hon'ble Apex Court in Kedarnath .....

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It was disallowed only on the ground that it was not provided for in the accounts. In the case of Kedarnath Jute Manufacturing Co.Ltd. v. CIT, it has been held by the apex court that whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto not on what view and the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter. Thus, not making the entries i .....

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